Excerpted from the EvaluateMedTech ® World Preview 2016, Outlook to 2022
The fifth annual EvaluateMedTech® World Preview brings together many analyses to provide a top level insight into the expected performance of the medtech industry between now and 2022. Based on their coverage of the world’s leading medical device and diagnostic companies, the World Preview highlights trends in medtech including: consensus sales forecasts of leading industry analysts by device area to2022; the top 20 companies in 2022; R&D spend current and future; FDA approvals; M&A; venture financing and IPOs.
The world preview suggests that the global medtech industry is expected to grow at 5.2% per year (CAGR) between 2015 and 2022, culminating in 2022 global sales of $529.8B. The analysis is based on in-depth forecast models for the top 300 global medtech companies.
Diagnostics are big, but neurology is fast
IVDs may be the largest sector but it is not the fastest-growing. The greatest expansion of a top-15 device area will be seen in neurology, which has a forecast CAGR of 7.6% between 2015 and 2022. IVD sales will only grow at around 5.6% during this period.
In vitro diagnostics will remain the number one device area in 2022, with sales of $70.8B – more than 13% of the industry’s total sales. Roche is the leading company in this segment, with its 2022 test sales forecast to reach $12.8B.
Merger mania leaves Medtronic in charge
Consolidation within the medtech industry is winding down, with M&A activity in the first half of 2016 having slumped 79% from the same period in 2015 to just $17B. Now that the dust has settled, Medtronic has emerged as the largest company by sales of medical devices: its 2015 revenues came to $28.8B. Remarkably, its 4.7% annual growth rate puts it even further ahead in 2022, when its medtech revenues are forecast to reach $39.9B. There are still a few sector-changing deals in the pipeline. Most notable is Abbott’s pending purchase of St. Jude Medical for $25B which could help bump Abbott up the company rankings from seventh position overall to third.
Ten-year approvals high
On the regulatory front, the FDA has had an outstanding year, increasing the number of first-time PMAs and HDEs by 55% over 2014’s total to a ten-year high of 51 in 2015. That said, the pace seems to have slowed slightly since. The preview found that up to the end of August 2016, the FDA had issued 27 first-time PMAs, slightly down on the 2015 figure of 30 at this time point. As if to compensate, over the same period there were 15 de novo 510(k)clearances, a 50% increase over the same point last year.
Overall the device industry is growing reasonably rapidly, and the calming of the M&A scene is no bad thing.
Already the sector is seeing a resurgence of smaller tuck-in deals on which start-ups, a significant source of disruptive new technologies, depend.
• Worldwide medtech sales forecast to reach $529.8B by 2022
• Worldwide medtech market forecast to grow more slowly than prescription drug market, with a CAGR of 5.2% between 2015 and 2022 versus 6.1% for pharma
• M&A activity in H1 2016 slumps 79% to $17B following 2015’s flurry of mega mergers
• Medtronic becomes the leading medtech company in 2015 following the $50B acquisition of Covidien…and Medtronic remains top in 2022; sales forecast to reach $39.9B
• Johnson & Johnson retains leading position in the orthopedics market in 2022 with 24.1% market share; but Zimmer Biomet forecast to be a close 2nd with 20.6% market share
• In vitro diagnostics remains number one device area in 2022 with sales of $70.8B; Roche continues domination of sector with 2022 sales forecast to reach $12.8B
• Medtronic continues to dominate the cardiology market; sales forecast to reach $14.1B in 2022
• Medtech R&D spend forecast to grow by 4.3% per annum to $34.0B in 2022
• Medtronic tops table of R&D spenders in 2022 with $2.8B forecast
• Number of first-time PMAs and HDEs hits a ten year high in 2015; 510(k) clearances decrease 6% to 3,064
• Number of venture financing deals slumps 39% to 138 in H1 2016; value of venture financing only falls 6% to $2.4B
• Medtech IPO deal values fall significantly in H1 2016 to $164m
Worldwide Medtech Sales Forecast to Reach $529.8B by 2022; IVD Remains Number One in 2022.
The report’s consensus forecasts find that the medtech market will achieve sales of $530B in 2022, growing by 5.2% per year (CAGR) between 2015 and 2022.
In vitro diagnostics (IVD) will be the largest device area in 2022, with sales forecast to reach $70.8B, representing 13.4% of the industry’s total sales. Cardiology takes the second spot, with annual sales increasing to $62.3B in 2022 from $42.1B in 2015.
Neurology is forecast to be the fastest-growing device area, with a CAGR of 7.6% between 2015 and 2022. See figures 1 & 2, page 36.
WORLDWIDE MEDTECH SALES IN 2022: TOP 20 COMPANIES
Medtronic Remains Top Medtech Company in 2022; Sales Forecast to Reach $39.9B.
The report forecasts find that Medtronic will remain the world’s leading company in 2022. It is forecast to achieve sales of $39.9B, representing a 7.5% share of the medical device market.
Abbott Laboratories has announced several M&A deals this year. It is currently in the process of acquiring both St. Jude Medical and Alere and is also selling its eyecare business to Johnson & Johnson. Following the completion of these deals the company ought to jump from 7th in 2015 to 3rd place in 2022 in the company rankings, with potential sales of around $22B in 2022. See figure 3, page 37 and figure 4, page 38.
WORLDWIDE MEDTECH VS. PRESCRIPTION DRUG SALES (2009-22)
Worldwide Prescription Drug Market Continues to Outperform the Medtech Market.
As noted above, the report’s forecasts find that the medtech market is forecast to grow at 5.2% per annum (CAGR) to reach $530B by 2022. By comparison, the worldwide prescription drug market is forecast to grow by 6.1% per year from2015, reaching $1,121B by 2022. Both industries are expected to experience steady upward growth over the coming seven years. This slower growth in medical device sales means the value of the medtech market will be around 47.3% of that of the prescription drug market in 2022. The medtech sector was half the size of the prescription drug market in 2015.
Both industries contracted in dollar terms in 2015 as a result of the weakness in the Euro, as US companies recognized fewer dollars for sales in the Eurozone. See figure 5, page 39 and figure 6, page 40.
IPO ANALYSIS: 2014 TO H1 2016
MedTech IPO Deal Values Fall Significantly in H1 2016 to $164m. The first half of 2016 saw a dramatic drop in the amount of funding raised through initial public offerings. In the first half of 2015, $853m was raised, compared with a meager $164m in the first half of 2016.
The number of IPOs has also continued to decline, with only ten IPOs in the first half of 2016, as opposed to 25 in H1 2014 and 17 in H1 2015. The biggest IPO in H1 2016 is the $45m NYSE listing of Senseonics, developer of the Eversense™ Continuous Glucose Monitoring System. See figure 7, page 40.
Evaluate is the trusted provider of commercial intelligence including product sales and consensus forecasts to 2022 for commercial teams and their advisors within the global life science industry. It helps clients make high value decisions through superior quality, timely, must-have data and insights, combined with personalized, expert client support. Evaluate comprises EvaluatePharma® , EvaluateMedTech® , EvaluateClinical Trials® , EP Vantage and Evaluate Custom Services.
For the full report, click here.